When the Council of Ministers recently approved a draft budget for 2000, government officials touted a decrease in defense spending and large increases in health and other social services.
While the government’s proposed budget does include a slight cut for defense, that cut is offset by a 15 percent boost in spending on national security, an analysis of the budget shows.
So much for a peace dividend.
Taken together, defense and security in the proposed $620 million budget total $119.8 million, virtually the same amount as budgeted this year. The government’s claim that spending in defense and security is down from previous years is accurate only when looking at the figures as a percentage of the total budget, which is expected to increase from about $395 million this year thanks to increased foreign aid and economic growth.
Opposition parliamentarian Son Chhay argues the government should be able to do more, given the new peacetime environment and thousands of ghost soldiers on the military payroll.
“There is some progress in budget allocation such as cutting defense spending by 5 percent and increasing expenditures in health and education,” said Son Chhay, a National Assembly committee chair from Sam Rainsy Party. “But we’re still continuously having an old-style budget, spending more money [overall] in military [and security] and less money in the social sector.”
Defense co-Minister Prince Sisowath Sirirath (Fun) also said the budgets for defense and security shouldn’t be the same as last year, given the fact the new coalition government has made efforts to cut police and military forces.
Finance Minister Keat Chhon acknowledged the amount of defense-security spending is one of the major weak points of the new budget plan and the number of public servants on the payroll are still more than necessary.
Prum Sokha, secretary of state for the Ministry of Interior, said Friday he could not answer why security is budgeted for an increase next year, saying he was not involved in drafting the budget and has not analyzed it yet.
He did say, though, the Ministry of Interior has been granted a new responsibility for border security which formerly was the military’s responsibility, and that could be one of reasons for the budget increase.
“We have no plan to recruit or hire additional staff next year, but the new structure of the ministries might affect the budget allocation,” Prum Sokha said.
Another striking element of the government cabinet’s proposed budget for next year is the 57 percent increase in the budget itself, from roughly $395 million to $620 million.
Officials are attributing that primarily to the return of foreign aid, much of which was cut off after the factional fighting of 1997.
Last February, donors at the Consultative Group meeting in Toyko committed some $470 million for the next two years.
The proposed government budget includes a figure of $223.7 million of foreign aid, or 36.1 percent of the budget.
In 1999’s budget, donor money accounted for only $65.8 million, or 16.7 percent of the budget.
Domestic revenue will see a healthy increase, but not as sharp of an increase as this year.
The Ministry of Finance predicts the government will collect $396.1 million in domestic revenue next year, including $280.3 million from taxes and duties.
In the 1999 budget, the government predicted it would collect $327.6 million, including $224.5 million of taxes and duties. Actual revenue collection is running 10 to 15 percent above projections.
“For the 1999 budget, we saw a sharp increase in domestic revenue because of the value-added taxes and garment quota exports,” said Sok Hach, economist of the Cambodian Development Research Institute.
“However, we cannot expect such an increase in 2000 because there will be no new measures to increase domestic revenue.”
The government is under pressure from donors, however, to be more effective in collecting tax, such as timber royalties and customs duties.
According to the draft budget, only $346.1 million is allocated to various ministries.
Officials say that the remainder of the budget, $273.7 million, is slated for capital expenditures and debt repayment.
Capital expenditures include the government’s match on international aid projects such as road restoration.
The draft budget shows that spending in health and education is scheduled to increase by 51 percent to $31.8 million and by 46.8 percent to $48.2 million, respectively.
Allocations to rural development and environment are more than doubled, from $900,000 to $2.1 million and from $500,000 to $1.1 million, respectively.
Although experts applaud the government’s efforts in increasing spending in the social sector, they are skeptical of the government implementing such a planned allocation. Sok Hach noted, for example, the government increased the 1999 health budget more than 80 percent from the previous year, but only 27 percent of the allocated amount was actually disbursed in the first nine months of this year.
“Cambodian people need true political will and good governance, not good-looking political will,” Sok Hach said.